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tv   Nightly Business Report  PBS  October 22, 2012 6:30pm-7:00pm PDT

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>> this is n.b.r. >> tom: good evening, i'm tom hudson. we're here in boca raton, florida, at the site of tonight's third and final presidential debate. while the debate's about foreign policy, voters here in florda remain very concerned aboutfl jobs. >> susie: i'm susie gharib. while main street's focused on the presidential election, here at the n.y.s.e., wall street was focused on earnings. and after the market closed, investors got an earnings surprise from yahoo. details on that and more tonight on "n.b.r."! a big splashy earnings report tonight from yahoo's new c.e.o. marissa mayer, in the top job
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only three months, announced quarterly profits and revenues that came in higher than analyst estimates yahoo shares surged 3% to around $16 a share in after hours here are the numbers: earnings per share of $.35, $.10 above estimate revenues came in just over $1 billion, slightly more than forecasts. while the company is still struggling, mayer said she's taking steps for to "position yahoo for long term success". joining us now with more on those yahoo numbers, colin gillis, senior technology analyst at b.g.c. >> sokolin, where they were up why date on that analyst call this afternoon, what is he going to do, and dow buy into it? >> yeah, the wheels did not come off the bus on yahoo! and that was very rs.ouraging for inves this is a company that still is facing some significant challenges. revenue was flat. they're still struggling to find growth but she did paint the clear message that we all like about how she
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wanvgoing to turn around, focusing in on the opportunities on search, making sure she brings in employees and trying to chase after the mobile opportunities as well. >> you know, everybody talks about monetizing mobilere. >> you know, listen, when su have the quantity of the users that yahoo! has that is its largest asset. you talk about north of 700 million worldwide, use month so m yes, if you are building good psducts people will use it. >> so tradeddu newspaper after-hours trading, would you buy yahoo! at $16? >> you know, we are still a buyer on it. we think there is a fair amount of value left to be unlocked in this company. we have a $19 price target, about 15% upside. so it's not for everyone. it's going to be a bumpy rod but again the expectations are set d low this is step one in the turn around. >> quick questions about apple. a lot of expectations about
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apple's announcement tomorrow. people are expecting a minii pad. how important ithis product launch for app snell. >> it is actually quite important because the ipad is the second most seg revenue stream to apple after the iphone. and competitors have gotten some traction by selling a 7 inch tablet.d apple wants to nip that in the bud. i think will you see them come out with a nice light ipad air product that will beannounced tomorrow. >> real quily, investors are buying up q the stock. it's now at $634. would you buy apple? >> well, the issue you have to be ccerned about here is i woube not be buying more apple at this levele because when dow get that new ipad it will be less profitable than previous version. the competition has learned to compe against apple with price and are using it to their full advantage. >> colin, do you have any disclosures to make on yahoo! or apple? >> i do not own yahoo! or apple and the firm does not prove any investment banking services to those
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companies. >> susie: thank you so much. colin gillist. >> susie: even before yahoo's nice after the bell surprise the stock market was being pushed and pulled by corporate earnings. a late round of buying lped the major averages erase big losses, and end todin in positive territory. the dow added to two points, the nasdaq powered in part by apple, jumped 11 points, while the s&p 500 tacked on less than a point. e pratt reports, despite today's comeback, it could be a spooky stretch for investors.t >> reporter: a halloween pop up store has popped up right across the street from america's symbol of capitalism. and, it seems rather fitting, as lately the environment has gotten scarier for stocks. the big ghoul in the market right now, corporate profits. while earnings season started off okay, it's recently deteriorated. but, market pros are worried about other spooky issues, too. >> fiscal cliff will absolutely make it uglier. if we continue to get really weak earnings numbers and
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guidance going forward that's going to make it uglier, if we continue to get nothing our of europe, th 's going to make it ug, ier. >> reporter: since alcoa kicked off earnings season two weeks ago, the s&p 500 has lost close to 2% of its value. and, just today, cerpillar became the latest company toer exceed expectations with its bottom line. but, its revenue fell short of forecasts, a growing trend this quarter. on top of that, cat trimmed its earnings outlook for this year, and said 2013 would be pretty much the same as this one. its c.e.o. also mentioned the looming fiscal cliff and, something that's attracting attention among >> c.e.o.of these major corporations are getting ready to carpet bag on washington because they're disgusted with the lack, with the gridlock, the lack of clarity, with confusionf over taxes and healthcare and ant antion and so they >> reporter: and, then of course, there's the election. while it's tough to sawhat either candidate will mean forwh stocks, strategist david bianco
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describes his market outlook this year as "election dependent." >> if it's an election that brings visibility to the tax policies we're looking for, a continuation of low and equal dividend capital gains rates, then we're comfortable with 1,500 on the s&p for yearend. if not, 1,450 for yearend and 1,500 12-month target is likely to stay unchanged for longer. >> reporter: clarity has become the big word lately for stock investors. until there is greater clarity on the election, the fiscalst cff and the u.s. economy, market prosd redict stocks prices will remain relatively stuck. suzanne pratt, "n.b.r.," new york. s >> susie: still ahead, tonight's et: regionalst t nks, a e okwht why the housing comeback can't save the regional bank stocks. it's make or break tonight, for the presidential candidates. itpolls show president obama and governor mitt romney are neck- and-neck. s tonight they have their third
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and final debate in boca rato and tom is there. florida is the big fridz for the campaign. it has the most number of electoral vote its at stake, in the fall election. it also a state that has felt the full force of the great recession. the housing market in some areas in florida has shown signs of life but remains well bloat boon years. the job market in the sunshine state has seenlow recovery. >> t lunch crowd start to its file in to vinnie's all day calf nie boca raton around 11:30. despite it's name vinnys is owned by a guy named jay dietz. he bought the restaurant from vinny more than a decade ago. >> food prices are going up a couple extra dollars i won't sacrifice the quality of our food just to
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make a couple extra dollars. >> reporter: wile tonight's debate focuses on foreign affairs t is still the competent that remains the issue for floridians. >> the big issues have to be taxes and jobs. they have be to-- to be. just talking about the bank, the insurance industry, and all the businesses they seem to be doing so well, when everybody sells suffering. so i would le to see some moe regulation there. >> these florida voters are whom both residentialat campaigns in theswing statth are after. polls have florida leaning toward governor romney but most survey does to the give romney over 50%, illustrating just how close this race may be in one of the state's hardest hit by the recession. >> it's impossible. sends outside resumes and resume that is another thing. sends out resume, nobody reads them or calls you, it is not like you can walk in and ask for a job and they met you and you knew the people. you know, they saw you, they asked you questions. it is just a piece of paper and if you happy to pick it up are you lucky. >> i have two children, a
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26-year-old in l.a., a 29-year-old in new york, and when they graduated, it was extremely difficult for them to get and maintain jobs. and from the future of my children and grandchildren and others might v i feel it's time for a change and we need to embark on a new plan. >> odds are a significant area where florida's economic recovery lags the nation. florida's unemployment rate 8.8% in september 8, well above the national rate of 7.8%. housing also continues to be a challenge. while some areas have seen foreign and cash buyers move into the market, 40% of florida homeowne are still underwater. housing is an issue. we h aen't heard much about during this presidential campaign. certainly not during the first two presidential debates. and we won't hear much font considering the two dan datas will focus on foreig foreign-- all this week we are looking at the state of foreclosures across the country. four years after the housing bubble burst. we spoke withhe author of the book foreclosure nation,
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earlier today here in boca ra tone. >> the united states foreclosures in general are looking better. month over month, year-over-year, we're down significantly, 16% i think year over year. but we're seeing ahe strong bifurcation along the lines of judicial versus nonjudicial states. >> explain to us, explain the difference and why th's's important when it comes to fore-- foreclosure. >> the difference between those is in judicial states you require a judge in a courtroom to approve the foreclosure and of course the reason why you see the bottleneck therepo is in those states is because the ofhe delay and investigations in lawsuits, changes in the rules and procedures required to do those changes. the problem of course then is that in those states, florida, for example, we're seeing foreclosure goes up because they were backlogged for so long. so in florida foreclosures are up, 24%, year-over-year and 11 months of increases meaning this is not just a blip on the radar screen. >> this is a state in florida, where we are, where the economy comes together as a political issue,
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foreign affairs tonight obviously with the presidential dete. but we haven't heard a lots about house why do you think tthat is? >> well, because no one really has the answer. >> part of the problem is that really housing is inextricably intertwined with employment. full wages go up, people start earning more money, they are not going to pay more money thor homes.or so we're really in a rut as far as that goes but the other issue in terms of floor dark let's look past the election now s what is going to happen what will the state look like down the road when all of these investors who are bulk buying foreclosed homes from the govergoent are using the homes as rentals? are we going to beat the rent-- be the rental state. >> nationwide we have seen existing home staens bottoms out, higher, new home construction, la month was mas at its highest point in the last several months, prices have begun to be sustainable here, all these seems to be good news, but the foreclosure stat thaws you point to still very difficult. lots of homeowners here in florida still underwater. >> it's not bad news. it's better than bad news
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but it's certainly not good news. one of the things we're going to see as a result of this is a continued trend that historical home pricee homevalue line is going to continue to bump along the bottom. for many it can be more damaging in the long run trying to hold on and not seeing home appreciation than it would have been if they just took that hit over the last three or fouryears had been moving on with their life and rebuilding. >> four years on to the housing bubble burst or two years after the robo signing scandal, why are we still seeing this number of foreclosures come tomarket very month. >> well, the existing foreclosures are just-- because the banks are more comfortable doing that. but for new foreclosures a big part-that is just a mistake. pew long can peop hold on when they know they run water and just sitting and waiting and hoping values will go up. eventually people have to cut their losses and move forward. >> the other big part of it is that, and this is not short sales but thed. preforeclosure stage is that the banks are getting more on board with doing the short sales and doing the-- and moving this
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insen-- inventory, so that is a big thing, the question is who are the buyers. a huge majority of those buyers are still investors and cash buyers as opposed to first-time home buyers which begs the question what are these folks, these 2 or 3 million new renters in this country going to be doing when they need an nest egg or emergency when it comes time to retire or pay for education. the question going to be after the election, how much is the gornment going support homeownership in general. rules like interest deductions and other policies that really help to encourage and enable people to have that american dream. >> now early voting is g already under way here in theunshine state as well as many other states. hundreds of thesa ts of absentee and earlyotes have after been cast. in the audience of undecide voters still left to cast ballots is that muvo smaller and that much more important ler both candidates, their campaignsnd supporters tonight.
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susie: shares in the energy company nexen were o s sharply today after the canadian government rejected a bid by a malaysian state-owned oil lympany to buy into canada's energy market. the surprise decision is making analysts worried the canadians might also reject a much larger deal by chinese oil giant c.n.o.o.c. to buy calgary-based nexen.n. darren gersh looks at what's at stake as chinese state-owned companies flex their financial muscle. >> reporter: it is no secret the chinese government is eager to secure natural resource assets around the world. but the canadians and many other governments have growing concerns about state-owned chinese companies snapping up their oil resources by buying companies like nexen. >> i don't think it looks good
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for nexen shareholders rit now. that doesn't mean that c.n.o.o.c. can't come in and sweeten the deal, try to make some additional concessions to the canadian government, b. i would say the deal is definitely in jeopardy at this point. >> reporter: the chinese do have the cash to up their bid to win canadian approval, but even if the nexen deal falls through, chin ie companies will bech lookg to make more big deals. >> the chinese have a really "going out" policy towards investment. they have awakened to the fact that you can make a lot of money outside of china and they've gok all these reserves that they'd like to make more bucks on. >> reporter: the u.s. government is expected to begin a second security review of c.n.o.o.c.'s offer for nexen focusing on the company's oil leases in the gulf of mexico. as they increasingly go toe-to- e with u.s. companies around the world, chinese state-ownede companies present a crucial challenge to u.s. policy makers. >> and that's creating pressure not only politically, but also pressure from the business community saying "how are we, a private company, going to compete with the largeness and power and the funding of a
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entire government?" >> reporter: in the last three months chinescompanies invested $3 billion in thei united states, and a report the rhodium group predicts the dealmaking will soon expand beyond energy, into servicesor like entertainment, hotels and finance. darren gersh, "n.b.r.", washington. >> susie: on wall street today, investors were hesitant to buy stocks ahead of tonight's big presidential debate. they were also pre-occupied with that flood of earnings we told you about earlier. and, asuzanne reported, revenues are the key worry for investors, and a big theme of
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tonight's "market focus." after the close, texasd, instruments reported a decline in revenues, due to falling demand for its chips. the company also sees more weakness for the rest of the year. that overshadowed the compy's 30% jump in profits for the latest quarter.y the shares fell fractionally in after-hours trading. there was also a big profit gain at the parent company of north face apparel and wrangler jeans corp reported a 27% increase in third-quarter profits, which was better than expected. the company also raised its full-year outlook. and, once again, sales fell short of expectations, due to weakness in europe. investors bailed out of the stock, which fell more than 4% to $159 a sharr those concerns about europe hurt shares of other apparel and accessories stocks. ralph lauren, coach, and tommy hilfiger parent p.v.h. all fell at least 1.5% percent. hasbro, the maker of
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> reported better than expected third-quarter profits, im3r06ing u.s. margins and higher sales in australia helped offset price declines. but shares of another miner, gets 1.5% to $40 a share> third quarter profits fell sharply, due to a big drop in gold producon in indonesia. two mergers in the news today, first, toyota industries buying u.s. parts maker cascade in a $759 million deal. this toyota, is the big japanese transportation equipment company, and the sister companyn of toyota, the automaker. that deal st shares of cascade soaring 18%.t now for the other merger, genealogy website has agreed to be acquired by an investor group led by european private-equity firm pewrmira. the price tag is about $1.5 billion, or $32 a share. the stock settled just shyff the buyout price. among the day's big decliners:
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monster beverage. it plunged a monstrous 14%. the f.d.a. has reportedly been asked to look into five deaths that may have occurred from consuming too much caffeine from its energy drinks. now a story for fans of annie's homegrown products. the stock slumped more than 3% after a barrons article questioned whether thshares are too and finally, the most actively traded e.t.f.s ended mostly higher on the day. and that's tonht's "market focus."ht
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>> susie: our word on the street tonight: regional banks. they've been reporting a big jump mortgage loans. but lindsey bell of the street.comays that hasn't.c meant strong earnings, or a higher stock prices for regional banks. >> mortgage banking regional banks aren't spending. >> no, they're not. they are benefiting in the mortgage banking area, as you mentioned, they are seeing significant growth there, lead by refinancing. now what is offsetting that is net interest margin. and basically what that is, it's the number that calculates the money they are making on the loans they have out less what they ave to paya depositors like you and i i leave money in the bank. now those numbers are under pressure. and why is that? it's because the feds interest rate level is 0. now that's making it hard for these banks to make
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money in that area, and they are having a hard time offsetting it. >> and one of the banks that is experiencing that as you pointed out is suntrust, which has been a very popular stock with investors, reported earnings tody. y.pending on how you look at the numbers they have may beat or just missed their earnings. but the stock tumbled 3% so what's the back story there. >> yeah, no, it was a very complicated earnings report there were a lot of one-time items. most analysts estimates that i talked to definitely missed on the epf, line, net interest margin and also under pressure the real story here was on the cost line it wasn't clear to investors what the management team plans to do to manage costs going forward. now to their credit they did just complete a 300 million cost savings plan were they cut those costs over the last year. but we got no new plan. the reason that's scary for investors is that is how these regional banks have
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been offsetting this low-interest rate envinment. ore ofy want to see that from suntrust as well as the other regional banks. >> you have a list of other banks that you put in your report tonight. -- today, let's put in a look at this chart. we haveothe top thare, huntington bancshares and tnc. now they reported their earninglast week, their weock fell sharply. they rebounded a little bit today are.l they dealing with the same issues as suntrust. >> yes, they are dealing with the same ssues. now there are nuances to each company specifically. but net interest margin is certainly under pressure here. if it wasn't in this quarter it will be gog forward. and that's going to weigh on these stocks overall for its longer termgo. >> you selected two regional banks that you say are standouts. let's take a look. u.s. bancorp and t bank y do these stand out for you? >> well, key bank would be my top pick here.
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first of all they buck the earnings trend. they saw net interest margin increase in the quarter. they've got loan growth that is over 5% which is industry leading and in addition they've got a restructuring program i just talked about cost. they're going to cut 150 to 200 milliocost over the next year. management reiterate theted are on track to do that and it trades at a discount to its tangible book value which is how most analysts vals u this company. now u.s. bancorp on the other hand is more pensionive stock. but they are moreco consistent performer. they have seen significant loan growth for some period now. uld that could, s continue. and they have a very strong balance sheet which mean these have a great capital positiou and industry lead be return on equity which means they're returning cash to shareholders, so even if you buy it here where the stock maybe isn't priced cheaply, you still can make your money in the longerm. >> all right. very interesting stuff. do you have any disclosures
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to make on any of theselo stocks we discussed? >> i do not. i own neither, none of them. >> okay. all right. good. thanks a lot. lindsey bell from after the financial crisis, and its bank bailouts, tonight's commentator says main street's perception of wall street hasn't changed. here's wall street journal columnist simon constable. >> something has vanished from mainstreet. its trust in wall street. as a result small investors are dumping stocks. in fact, even as the stock market has soared cle to record highs, mutual and exchange-traded fund vestors, a rough proxy for retail stock buyers, have dumped $138 billio, in shares, that's billion with a "b", according to data from the investment company institute. some people will tell you that's because small investors are too emotional and so they make terrible decisions. they were burned by the credit crunch and the popping of the tech bubble and are now are gun shy. in short, the message is, they
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are stupid because they've missed the recent rally, but maybe they aren't. maybe they are justly shy of shenanigans on wall street. new research shows that one in five chief financial officers of public companies admit to cooking the books. the study comes from professors at emory and duke universities. in a survey they found that about 20% of c.f.o.s used accounting tricks that didn't reflect the companies underlying operations. the size of the misstatements: about 10% of earnings. wow! if that sounds bad, it's actually worse than you think. this type of book cooking is completely legal. and because its legal nothing will be done about if you d't know what the't company's truly making why would you invest? and that's maybe a good reason to steer clear of the u.s. stock market. i'm simon constable. >> susie: let's take a look at what's coming up tomorrow on "n.b.r." we'll see if investors like facebook earnings, the company
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releases quarterly results after the bell. also tomorrow, a big product debut from apple, and as we mentioned, all bets are on an ipad mini. and ben bernanke and his fellow policymakers at the federal reserve kick off a two-day policy meeting. that's nightly business report for monday, october 22. he a great evening everyone. we'll see you online at: and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wh.ioorg
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